How "little bets" lead to extraordinary outcomes

In January of 1996, Ph.D. students Larry Page and Sergey Brin began working on a research project at Stanford University. Over the past decade and a half, what began as a project to understand and prioritize library searches has transformed into a successful multinational corporation that is today worth billions. You may recognize Page and Brin's big success as a little company called Google.

The success of Google was not created overnight. What began as a small research project grew over time through what business expert Peter Sims calls a series of successful "little bets." In my recent conversation with Peter, he discusses how many great companies start small, without a big idea, and offers insight from his latest book, "Little Bets: How Breakthrough Ideas Emerge From Small Discoveries." Peter dispels the myth of "thinking big" in business and shows how successful companies like Google, Twitter and Starbucks were built by taking small, experimental steps. Peter looks in-depth at the small-step processes used by successful companies, including solving problems using "The Worm's-Eye View," the value of play in creating ideas and the iterate process. By taking small steps, these companies have been able to learn, grow and make unexpected discoveries that lead to extraordinary outcomes.

Whether you're a budding entrepreneur or simply looking to find a solution to your everyday problems, you can learn how making little bets can propel your ideas to success. Read an excerpt from our conversation below, and listen to the full Peter Sims "Little Bets" interview now at www.richerlife.com.

Q: In the book, one of the chapters is called "The Genius of Play," and you talk about how some great ideas and some really great discoveries can occur almost by accident when you're "playing." Can you talk about what that genius of play really is?

Peter: I worked with a research team at Stanford for this book, and we interviewed over 200 people who were creative or innovative entrepreneurs or people who work at Pixar doing filmmaking, or the architect Frank Gehry, or military counterinsurgency strategists -- you name it! One of the things we noticed is that across all those groups, they had certain similarities in the methods they used. One of those was that they used little bets, and another was that when they were at the early stages of developing their ideas, they were very willing to be playful and even use a lot of humor. Musicians as well. We interviewed John Legend the recording artist. And they all said the same thing. You can't overanalyze new ideas too early; you can't judge them too early.

At Pixar, for example, they have an environment that they call a "plus-ing" environment, where they use techniques out of improvisational comedy to develop their early stage ideas. So, if you were to say to me, "Peter, I have an idea for a new podcast," instead of saying "Yes, but, Robert, you probably shouldn't do a new podcast because we've already got one," I would say, "Yes, and you've got a great platform to build from," and then go from there. So, they use these principles of "Yes, and ..." taking every offer that somebody gives them. Any idea that somebody presents to another person at Pixar is taken, and instead of being judged or criticized, it's built upon using these principles, again, from improv. It really is a remarkable part of the Pixar culture.

And this is something that if you look at the research in neuroscience, it's shown to actually help the idea generation process. When people are able to be in an improvisational state, the neuroscience shows that the part of their brain that is responsible for judging or for censoring their ideas is actually deactivated. So, they're no longer judging their own ideas and they're no longer judging the ideas of others too prematurely. Instead, it opens up this part of the brain which is much more creative. So, there's a whole chapter in the book on that. It's just an example of one of the methods that people across all these different areas tend to use.

(Robert Pagliarini is a CBS MoneyWatch columnist and the author of "The Other 8 Hours: Maximize Your Free Time to Create New Wealth & Purpose" and the national best-seller "The Six Day Financial Makeover." Visit www.YourOther8Hours.com.)